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Airfares still climbing: Finding bargain tickets for most trips in 2013 will remain difficult

View SlideshowRequest to buy this photoALEX GARCIA | CHICAGO TRIBUNE PHOTOSSummer and holiday crowds, like this one at O’Hare, will mean higher airfares as airlines continue to shrink supply to line up with demand.

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Airfares will be on the rise in 2013, and those niggling airline fees will metamorphosize into
optional bundles of services.

And 2013 might be the year you’ll finally be able to keep your smartphone, iPad or Kindle turned
on during takeoffs and landings.

Those are some of the predictions airline industry experts foresee in the new year. Here’s the
lowdown on fares, fees and flight experience for 2013.

Higher fares

Airlines pushed through six fare increases in 2012. Expect a similar number in the new year,
said Rick Seaney, co-founder of FareCompare.com.

“I wouldn’t be surprised to see airfares rise like they did (last year), between 3 and 6
percent, domestically,” Seaney said. That’s because airlines will succeed in balancing supply and
demand by trimming the number of seats they offer to match “decent, but bordering on tepid,
demand."

Fares typically are driven by four main factors: competition, most of all, then supply, demand
and oil prices. “If you look at those drivers, they are, for the most part, on the airlines’ side,
which gives them pricing power,” Seaney said.

That doesn’t mean there won’t be good airfare deals on some flights on some routes. And
consumers will still see lower prices during off-peak days, such as Tuesday, Wednesday and
Saturday, and off-peak seasons, such as late January and early February. Like this year, summertime
fares probably will stay relatively high, he said.

Airline mergers also can affect fares, and a huge one could take place early in 2013. American
Airlines and US Airways are in talks about combining.

Fees with a twist

The most noticeable trend in recent years with airline fees is that there are more of them: fees
for checked bags, aisle seats and onboard meals, among many others.

“What we hear is that people pay their fare and get to the airport and feel they’re constantly
being nickeled-and-dimed to death for things that used to be included,” said Kate Hanni, founder of
FlyersRights.org.

The top five U.S. carriers alone generated more than $12 billion in fees in 2011, with even more
expected from 2012, according to a report from professional services firm PwC.

What consumers call fees, airlines call “unbundling” — making a la carte choices from services
that used to be included in the fare.

A likely trend for 2013 might be called “rebundling,” airlines packaging a few now-optional
services and charging for a tier of service.

“The airline industry is in a period of transition regarding the pricing of its products,” said
Jay Sorensen, president of IdeaWorks, an airline consultant. “Airlines will offer fare products,
such as basic, basic-plus and comfort, and allow consumers to purchase their desired level of
comfort.”

American Airlines kicked things off in December by introducing packages of airfare upgrades
available on round-trip flights. For example, its Choice Essential tier will get you a checked bag,
priority boarding and no fee if you need to change your flight reservation. It costs a flat $68
extra per round trip. Its next tier, for $88, includes those perks plus a 50 percent frequent-flier
mileage bonus, same-day flight change, same-day standby and a premium beverage such as an alcoholic
drink onboard.

“It’s sort of back to the future,” Seaney said. “It’s taking those unbundled bundles and putting
them back in the fare, so you don’t have this perception of nickel-and-diming.”

Another issue that could see action early in 2013 is transparency on all those airline fees.

The Department of Transportation is considering forcing airlines to display optional fees
alongside airfares everywhere tickets are sold, so consumers can make an apples-to-apples
evaluation of fares.

Fares already must be displayed including mandatory fees, such as taxes and airport fees. But
now, many seemingly basic services are optional, such as checked bags or booking an aisle or window
seat.

What about gadgets?

The Federal Aviation Administration will be reviewing its policy that forces passengers to turn
off their portable electronic devices, such as smartphones, laptops, tablet computers and
e-readers, during takeoffs and landings — technically, below 10,000 feet.

Pressure in Washington is mounting.

In December, both the Federal Communications Commission and Sen. Claire McCaskill, D-Mo., urged
the FAA to finally allow electronic devices during takeoffs and landings. McCaskill, a member of
the Senate committee with jurisdiction over communications and aviation policy, points out the “
absurdity” of the ban, especially given that the FAA now allows pilots to use iPads to replace
their paper flight manuals in the cockpit.

Use of wireless phones or other electronics for voice calls is not being considered in that FAA
review.